Overnight Session Update

As I mentioned many times today, the 3C charts suggest a pullback and that's what I'd like to see to set up another trade like Friday's AAPL calls, but we need some downside and we need positive divergences in to that downside. We already saw evidence of some very early positive divergences and the TICK chart looked great as well, the intermediate term 3C charts and now even the longer term charts are getting more and more positive so the probabilities of a pullback favor accumulation in to a pullback.

Ironically after having had this opinion most of the day today, I get home late from my board meeting and look at the S&P and NASDAQ futures and see exactly what I'd hope to see. I'll admit it's very early in the overnight session, but I was hoping for early downside and perhaps a chance to get long in to a position in the afternoon, even if it is just a short term intraday trade.

Here are the SPX and NDX futures thus far in overnight trade.

S&P E-mini Futures

 1 min ES futures show a negative divergence in to the overnight highs and a leading negative divergence since then, this should drop ES in the overnight session, although the European open could have some effect, I'm hoping we get a lower open and as we usually see, perhaps a positive divergence after the European close. In any case, however this develops, it's worth reminding ourselves of what the highest probability for the longer term trend is, below is the ES 4 hour chart.

 A huge leading positive divergence in to the ES lows, this long term timeframe represents the longer term trend and the highest probabilities, so any short term pullbacks are highly likely to see positive divergences which give us a number of opportunities on the upside.

NASDAQ E-mini Futures

 Since the positive divergence at the afternoon lows, NQ went on to make an overnight session new high with a negative divergence in to that high, like ES, NQ also has a leading negative divergence on this 1 min chart. I like that we have good confirmation between the two futures.

Again, to remind ourselves of the long term trend and highest probabilities, here's a look at the 4 hour NQ chart.

Not only did NQ see a negative divergence in to the post QE3 announcement highs with downside following, the recent lows saw a huge leading positive divergence (leading divergences are the strongest kind). So once again, we have another chart in a longer timeframe confirming the same thing ES is showing us, the same thing the SPY, DIA, QQQ and IWM are showing us.

This is the move we have been watching develop and now it's starting to unfold. My view is to be patient on the leveraged longs we set up and to look for pullbacks to set up some leveraged trades, perhaps options (Calls).

Like I've said a number of times, "Not every decline is bearish and not every tally is bullish".

As I was finishing this post I captured the EUR/USD charts, this is pretty amazing...

 EUR/USD, now a closer look



Look at that nasty decline in the Euro, that would send Futures lower, amazingly the Futures chart's 3C indication was showing money moving out of the market on an intraday/overnight basis, somehow they knew something in advance and shortly thereafter, this happens to the Euro.

This is what ES looks like now...

We don't call them smart money for nothing, 3C did an amazing job at telegraphing whatever just went down. Imagine you were trading ES contracts right now on those signals, you would have made a very pretty penny!